U.S. prosecutors are pursuing guilty pleas, criminal convictions and “significant monetary penalties” from banks and their employees in the global investigation into the rigging of benchmark interest rates, a senior Justice Department official said.
Mythili Raman, the acting head of the department’s criminal division, said authorities “are not done” with the wide- ranging probe that has led to resolutions with three international banks, including the Royal Bank of Scotland Group Plc in February, and criminal charges against two former UBS AG (UBSN) traders.
“Banks will be held to account through public admissions of guilt, payment of significant monetary penalties and, as seen with RBS and UBS, criminal convictions,” Raman said today at a Washington conference sponsored by the Corporate Crime Reporter newsletter. “Banks will be required to remediate their bad behavior, individual targets will be charged and meaningful cooperation from the subject banks will be demanded.”
The Justice Department’s criminal division joined international regulators and law enforcement agencies in a probe of more than a dozen banks for their roles in the alleged rigging of interest rates including the London interbank offered rate, or Libor.
Barclays Plc (BARC), UBS and RBS have been fined more than $2.5 billion in the probe. Japanese subsidiaries of UBS and RBS both pleaded guilty as part of their resolutions. Traders rigged the benchmark to profit from bets on derivatives, while banks sought to submit artificially low rates to appear financially healthier than they were, according to regulators.
The Justice Department’s efforts to secure convictions in the Libor cases comes amid criticism from U.S. lawmakers of its performance after the 2008 financial crisis. Members of Congress seized on Attorney General Eric Holder’s comments at a March hearing, where he said the economic reach of larger financial institutions has had “an inhibiting impact” on prosecutions against them.
Lawmakers including Senator Elizabeth Warren, a Massachusetts Democrat, and Charles Grassley, an Iowa Republican, cited those comments when they pushed the department for tougher settlements in cases against banks.
Raman, who became the acting head of the division after the March 1 departure of Lanny Breuer, said her division is putting “a premium on securing cooperation from corporate entities” as it pursues financial fraud and foreign bribery cases. The three institutions that have settled their Libor cases are all cooperating with the Justice Department as part of their resolutions.
“Meaningful cooperation enables us to hold criminally accountable to the fullest extent possible the widest possible range of bad actors, from individuals responsible for the criminal conduct to other business entities,” Raman said.
To contact the reporter on this story: Phil Mattingly in Washington at email@example.com